About

Kodak Strategy

The Kodak Eastman Company was created in 1880 in Rochester, New York. George Eastman, its founder, created film on a roll allowing photographers and developers to take a picture without having to change a plate every time a picture was taken. Next, Eastman invented the plain black box camera that had a push button to take pictures and a key to advance the film. When the roll of film, normally 100 exposures, was complete the photographer sent the entire camera to the Eastman Company in Rochester for development, reloading of film and printing for a mere $10. The first Kodak camera led to the creation of their first slogan: “You press the button – we do the rest”. He named the brand of camera Kodak because it was short, it would not be mispronounced, and the name was unique in the business. (Gartrell, n.d.)

By the late 19th century and early 1900’s, advertising played a major role in Kodak’s marketing and promotion strategy. As a result, Kodak became a household word. Today, the Kodak name has become entrenched in home town America. It is known for being very American since its photo spots can be seen at iconic patriotic hot spots like Disneyland. In addition “Kodak Moments” help make it a household name for photography and imaging. (Wikinvest, 2007) Kodak has always dominated the “holy trinity of film”; film, paper and chemicals. (Upbin, 2000, para #8)

Kodak’s big concern is to remain competitive in the market place. The Eastman Kodak company had to take on some strong competition, such as Polaroid, who is famous for instant photography. Kodak began to sell their version of the instant camera in June 1976 to expand its market. The camera was called the Pronto which spit out a picture card which formed into a picture before the photographers eyes. The idea was successful and although Kodak’s ten picture pack of film was more expensive than Polaroid’s, several Japanese companies made cameras that used the new Kodak Film. (Time Magazine, 1976) Soon after, the disposable camera became popular. According to statistics, U.S. sales of disposable cameras grew 30% a year. Kodak sells more than anyone else, allowing Kodak to have sufficient cash flow to invest in a digital future.

In the mid 1990’s Kodak’s innovators began to dabble with digital photography. In fact, they invented the first digital camera and realized that digital technology would transform their business. By the year 2000, Kodak had sunk more than $5 billion into digital investments during the 1990s, but received only $20 million in digital earnings in 1999 to show for it. Daniel Carp, the latest Chief Executive at Eastman Kodak stated that “digital can generate half of revenue and quarter of profits by 2005”. (Upbin, 2000, para. #3) So why wasn’t Kodak getting a return on their investment?

One of the main issues that plagued the Eastman Kodak Company was not their innovation, but their timing in their marketing strategy and their assessment of the adaptability of its consumers. Kodak missed out on several holiday seasons where digital camera growth was high and failed to get a leg up on the competition back in 1996. The company was unable to “wean itself” from traditional film business. They have three major customer bases. The first is the Photofinishing Group which makes up almost 1/3 of sales. This group is made up of Kodak’s traditional film products and services that the average customer uses, plus products used by the film industry to reproduce and distribute motion pictures. The second group, not formed until 2003, is the Graphic Communications Group (GCG). It’s Kodak’s largest division which includes document imaging and digital printing services for businesses. The third group relates to healthcare services and is called the Health Group. This group specializes in healthcare imaging products such as x-ray devices and specialized films. To catch up to their competition, Kodak created a fourth group, the Consumer...

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